In a rural town in western Uganda, Nagasha struggled to find the money to pay for her baby’s delivery at a faith-based hospital. She was forced to sell part of her harvest and her husband had to work overtime to come up with the 20,000 Ugandan Shillings. However, when preparing for the birth of her second child, Nagasha learned about the HealthyBaby vouchers that would let her pay for her delivery at a fraction of the cost (USh 3,000). Maternal health vouchers have let Nagasha and many other women safely deliver their children in quality hospitals without being pushed into poverty by the costs.

Vouchers are an example of a “health market innovation”, a program that harnesses the private sector in lower and middle income countries (LMICs) to deliver better health and financial protection for the poor. While many governments promise well-functioning, state-run public health systems, what often happens is much more chaotic and less centrally managed, with patients seeking care from a plethora of providers, including drug shops, village doctors, nongovernmental organization (NGO) clinics, private hospitals, as well as government clinics.

A typical under-performing healthcare marketplace is characterized by the presence of:

Many small-scale and fragmented healthcare providers that are difficult to train and monitor and often operate informally without licensure;

Out-of-pocket payments by patients for many services, which are often unaffordable to the poor, especially those offered by higher quality, better-trained providers;

Few standards and little oversight of quality that leads to inappropriate diagnosis or treatment and use of counterfeit drugs; and

Shortages of qualified health workers, including doctors with specialty and sub-specialty qualifications, especially in rural areas.

Health market innovations help health systems improve quality, access, affordability and efficiency in transactions between patients and providers, promoting better health with less financial risk, especially for the poorest and most vulnerable. In 2010, the Center for Health Market Innovations (CHMI) was launched to serve as a global information source on these programs and policies—implemented by governments, NGOs, social entrepreneurs or private companies—that have the potential to improve the way health markets operate.

With eight partners based in sixteen countries, CHMI has identified more than 1,000 programs in 108 countries. These programs work to:

Better organize fragmented providers;

Mobilize funds and create financing mechanisms to provide purchasing power to the poor;

Set quality standards and monitor provider performance;

Educate consumers and providers to ensure that appropriate care is both demanded and provided; and

During its initial phase of operation, CHMI has identified five innovative emerging models that show promise, and may ultimately improve the performance of health markets in LMICs.

1. Low-Cost, High-Quality Retail Pharmacies

Mom and pop drug shops line the streets of cities and villages across LMICs. Unfortunately the quality of their offerings is equally all over the map, with many shops offering counterfeit drugs that don’t work and can be toxic. Professionalized pharmacy chains and franchise networks proliferating in Asia may improve drug quality and operational efficiency to keep prices low. In the Philippines, Botika ng Bayan and Generics Pharmacy are two popular franchise networks that have seen success. Similarly, in India, the pharmacy chain MedPlus originated in tech-hub Hyderabad and has since spread nationally.

2. Affordable Primary Care Clinic Chains

These chains—often for-profit—are set up to standardize quality and give low -income people more care options. Many chains operate in urban areas where large volumes can help them keep prices down. Inspired by the US drug store chain CVS’s Minute Clinics, entrepreneur Breno Araújo conceptualized Saúde 10 for launch in Rio de Janeiro. LiveWell’s anchor clinic in Nairobi is fully automated to reduce waiting times and provides consultation, diagnosis, and treatment for a wide range of illnesses.

3. Vouchers

Distributed for free or sold for a small fee, vouchers increase access to key health services by allowing low-income people to “purchase” (through demand-side donor or government subsidies) a specific package of services from approved clinics which often include both public and private facilities. Kenya’s Output-Based Aid Voucher program enables poor mothers to deliver their babies in their choice of accredited institutions for a small fraction of the normal price. Private maternity clinics have been able to expand their services and extend their customer base to poorer clients as a result.

4. Telemedicine

In many countries doctors and specialists cluster in urban areas leaving rural areas underserved. Telemedicine shows promise in bridging the rural-urban health divide. Programs like BuddyWorks in the Philippines connect family doctors with specialists living miles away via SMS and Skype. Other telemedicine programs connect village patients to doctors based in cities via high-speed video over internet. Devices like the Neurosynaptic ReMeDi box allows doctors to monitor a patient’s vital signs, diagnose illnesses, and recommend treatment via video conference. World Health Partners is a not-for-profit telemedicine chain using ReMeDi in India’s rural north.

5. Health Hotlines

Health hotlines provide people without access to trained doctors with basic health information and connections to available health services. Well known examples include MedicallHome, a subscription-fee funded program in Mexico, and HMRI, an Indian program funded by government contracts. MeraDoctor is a for-profit health line just launched in Mumbai. Hello Doctor 24×7 is an Orissa-based Indian health advice line so popular that competitors have adopted the very same name to attract customers. Popular throughout South Asia, these well-utilized businesses may soon be replicated in East Africa.

These models offer promising solutions to key health system challenges, but the question remains: Do they really work? What programs are actually improving quality, affordability, and access? CHMI is now working with our partners to collect better evidence and then use it to promote the scale-up and replication of high-impact programs.